Manhattan Apartment Rents Fall as Landlords Offer BreaksPrashant Gopal
Manhattan apartment rents fell for a fourth month in December and the share of new leases with landlord concessions jumped to an almost three-year high as potential tenants were lured to the surging homebuying market.
The median monthly rent dropped 1.6 percent from a year earlier to $3,100, according to a report today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Incentives such as a month’s free rent were offered on 13 percent of new agreements, up from 4.3 percent in December 2012 and the biggest proportion since March 2011.
Rents began dropping in September after 27 months without a decrease, giving tenants more negotiating power. A spike in mortgage rates from near-record lows in May drove buyers to act before purchases could become costlier. In the fourth quarter, sales of co-ops and condominiums in Manhattan reached the highest total for the period in 25 years of record-keeping, Miller Samuel and Douglas Elliman said last week.
“The rental market is cooling off a little bit,” Jonathan Miller, president of New York-based Miller Samuel, said in an interview. “It’s not an indication that the market is weak, they’re just off this frothy activity we’ve had for two years.”
The apartment vacancy rate was 2.79 percent in December, up from 1.77 percent a year earlier and the the second-highest since Miller Samuel and Douglas Elliman began tracking the data in August 2006. The number of new leases fell 27 percent to 2,109 agreements, the fewest since September 2011. The average landlord discount was equivalent to about one month’s rent, the firms said.
Beth Readlinger agreed to lease a West Village loft for $4,695 a month after her agent, Rory Bolger of Citi Habitats, negotiated a $200 rent discount with the landlord, who already was offering to pay the broker’s fee.
Readlinger, 37, a fashion buyer for Victoria’s Secret, fell in love with the apartment’s spiral staircase, 16-foot (4.9-meter) ceilings and arched windows, and said she would have taken it even without any sweeteners.
“The minute I walked in, I knew this was it,” she said. “It would have been above budget but I am even more excited to be able to get it within my budget.”
Readlinger, who previously rented a less-expensive unit in the same neighborhood, moved into the new loft with her boyfriend on Dec. 31.
Average monthly rents in the West Village ranged from $2,388 for a studio to $6,068 for a three-bedroom unit in the fourth quarter, according to New York-based Citi Habitats, which also released a report on the Manhattan rental market today.
Median rents were highest in the Soho and Tribeca districts, at $5,650 a month, and lowest in Washington Heights, at $1,700, according to the brokerage.
“This winter has definitely been an easier time to rent -- better deals, more ability to negotiate and a little more inventory to choose from,” Bolger said.
Leasing costs in Manhattan are unlikely to decline much this year because employment is improving and tight credit will keep many people in rentals, Miller said. New York City’s unemployment rate fell to 8.5 percent in November from 8.9 percent a year earlier, according to figures from the state Labor Department.
While rents fell in December for the market as a whole, they rose for larger apartments, the Miller Samuel and Douglas Elliman report showed. The median monthly rent for a two-bedroom unit was $4,813, up 4.7 percent from a year earlier. Apartments with three or more bedrooms commanded a median of $7,307, a 1.2 percent increase.
Luxury rents, the top 10 percent of the market, jumped 14 percent to a median of $9,095.
Across the East River in Brooklyn, the median apartment rent climbed 0.9 percent in December to $2,660 a month, Miller Samuel and Douglas Elliman said. Luxury rents surged 26 percent from a year earlier to a median of $6,073 as new high-end developments filled up.
Buyers in Brooklyn competed for a tight supply of homes in the fourth quarter, pushing up the median sale price to $570,110, the highest in 11 years of record-keeping, Miller Samuel and Douglas Elliman said in a separate report. Listings dropped 28 percent from a year earlier to the second-lowest total since the firms began tracking the data in 2008.
Brokerage Corcoran Group, which also released a Brooklyn sales report today, said the fourth-quarter median price fell 11 percent from a year earlier to $442,000 as properties priced at less than $500,000 made up a bigger share of transactions.